As we wrap up our special series on corporate risk, let’s review the elements we’ve covered. We began with integration risk and high capex. We then examined cyclicality and specialized sectors. Our third part covered short borrower histories, hockey stick growth, single products, and customer concentrations. Technology, regulatory, and legal risks followed that, as well…
Being in an industry prone to litigation is one of the trickiest corporate risks to manage. For one thing, lawsuits and class action claims aren’t under a borrower’s control. For another, judges and juries can be fickle. In dealing with a similar issue, they might hammer one defendant with major damages while letting another off…
In astronomical terms, it was a close call. Last Wednesday an asteroid almost a mile long passed within 1.1 million miles from Earth. The object, known as JO25 and nicknamed “The Rock,” was visible in small telescopes. “We’re safe,” remarked NASA plantetary defense officer Lindley Johson. ”From this one.” Keeping a sharp eye out for…
Last week’s column attracted the attention of one of our most loyal readers, and an astute observer of the credit scene. To go along with capex and cyclicality as prime corporate risks, he told us, “I would like to put in a plug for ‘Where’s the cash?’” He continued, “Maybe in middle market companies it’s not…
It’s hard to believe, but this July marks the ten-year anniversary of the collapse of Bear Stearns’ two sub-prime hedge funds, the first of a succession of events that eventually culminated in the worst economic downturn in the US since the Great Depression. While the recovery since has been anything but robust, the more the…
Institutional investors are combing through the private credit market searching both for higher returns and experienced managers to deliver those returns. The key to understanding why some firms are targeting higher yield investments is to also appreciate the kind of credit risks those managers are taking to achieve those yields. In this special series, we’ll…